UK’s Metro Bank targeted for takeover

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UK’s Metro Bank targeted for takeover

UK’s Metro Bank has received a buyout approach backed by private equity firm Pollen Street Capital, according to Sky News. The report is based on anonymous sources and has yet to be confirmed by Reuters

Sultan Sikander

June 14, 2025

4Min Reads

Finance Insights

Metro Bank was founded in 2010 as one of the UK’s first high-street banks in over 100 years, offering a customer-friendly approach and extended opening hours. Initially celebrated for its unconventional style and rapid expansion, it attracted retail and SME customers quickly. However, Metro Bank's growth story began to unravel in 2019, when a critical accounting error revealed that the bank had misclassified hundreds of millions of pounds in commercial loans, triggering a sharp fall in investor confidence and a collapse in its share price.

In the aftermath, top executives resigned, and the bank underwent significant restructuring. Since then, Metro Bank has struggled to regain its former position, especially as newer digital-only competitors like Starling Bank and Monzo gained ground. The pandemic years added further pressure, increasing bad loan provisions and compressing margins.

Jaime Gilinski's Turnaround Bid

In late 2023, the Colombian billionaire Jaime Gilinski Bacal stepped in with a £325 million equity investment, backed by debt financing of around £600 million. This injection was made through Spaldy Investments, giving Gilinski control of approximately 53% of Metro Bank’s shares. His strategy focused on cost reduction, capital efficiency, and divesting non-core assets.

Notably:

Metro Bank sold a £584 million unsecured personal loan portfolio to streamline its balance sheet.

It cut costs by over £80 million annually, including branch rationalization and workforce adjustments.

The bank refocused on specialist mortgage lending, commercial real estate, and SME loans, where it saw better margins.

By the end of 2024, Metro Bank reported a return to profitability, and in 2025, its shares have seen a more than threefold increase, though still well below their 2018 peak.

Pollen Street Capital: The Potential Buyer

Pollen Street Capital is a well-established UK private equity firm with a deep focus on financial services and technology. It manages over £5 billion in assets and is already a majority shareholder in Shawbrook Bank, a digitally enabled lender targeting SMEs and property investors.

Pollen Street has been actively pursuing consolidation opportunities in the UK financial space. Last year, it explored a £5 billion merger between Shawbrook and Starling Bank, although that deal did not materialize. The interest in Metro Bank aligns with its strategic focus on scalable banking platforms that can deliver stable cash flows under private ownership.

Analysts believe that Pollen Street views Metro Bank as a turnaround success story with undervalued assets and potential synergy with its existing portfolio. The bank's extensive physical footprint, while once viewed as a liability, could be strategically repositioned in a digitally-driven future.

Market Reaction and Valuation Insights

Metro Bank’s current market capitalization is around £750 million, significantly lower than the heights of £3.5 billion it achieved before its crisis. Analysts suggest that any credible takeover offer would likely need to be priced at a substantial premium, possibly in the range of £1.1–£1.4 billion, to persuade shareholders and stakeholders like Gilinski’s Spaldy Investments.

Despite the lack of official confirmation, the news has already stirred the market, with Metro Bank shares rising sharply in early trading. Investors are now closely watching whether Pollen Street will make a formal bid, or if this approach remains exploratory.

Regulatory & Strategic Considerations

A potential acquisition of Metro Bank by a private equity firm would be subject to:

FCA and Prudential Regulation Authority (PRA) approvals

Possible oversight from the Competition and Markets Authority (CMA)

A detailed shareholder vote, where Gilinski’s controlling interest will play a critical role

Strategically, integrating Metro Bank with Shawbrook or a similar institution could result in significant operational efficiencies, especially in risk management, compliance, and technology infrastructure.

However, critics warn that turning a retail-focused bank into a private equity-backed institution could lead to cost-cutting at the expense of customer experience. Pollen Street would need to balance financial returns with the public-facing obligations of a retail bank.

Sector-Wide Implications

The potential deal could be a harbinger of increased M&A activity in the UK banking sector, especially among mid-sized banks. Rising compliance costs, digitization pressure, and thin margins have made consolidation a practical path to survival for many.

Banks like Virgin Money, TSB, and even digital players such as Atom and Tandem may find themselves in similar scenarios if the Metro Bank deal sets a precedent. Moreover, if Gilinski agrees to the sale, it could spark further speculation around his long-term intentions in the UK financial market.

What to Watch Next

Formal Bid Announcement – Will Pollen Street make a concrete offer in the coming weeks?

Regulatory Reactions – What stance will financial regulators take on increased private equity ownership of UK banks?

Shareholder Movements – How will Spaldy Investments respond, and could they demand co-investment or a higher premium?

Public Sentiment – Will customers react positively to potential changes, or fear service quality erosion under PE ownership?

Conclusion

The news of a potential takeover of Metro Bank by Pollen Street Capital marks a pivotal moment for both the bank and the broader UK financial ecosystem. It underscores the appeal of restructured, recovery-phase assets to private equity firms and the ongoing evolution of UK retail banking. While no deal has yet been finalized, the coming weeks may reveal a significant shift in ownership and strategy for one of Britain’s most recognizable challenger banks.